I hear claims about a 15 to 1 economic impact and a 2.75 to 1 Benefit/Cost Ratio. Whats the difference?
Both answers are correct, but they answer different questions. Economists project that the Cincinnati Streetcar will cause new Downtown/OTR development worth $1.5 billion, or 15 times the cost of the streetcar. But that is simply a comparison of the cost of the streetcar to the cost of the buildings that are likely to be erected on account of its presence. A more sophisticated measure is a Benefit/Cost Analysis (a “BCA”). In a BCA, all costs and benefits are discounted to their Present Value because we’ll be investing $102 million up-front and about $2.3 million each year to operate the streetcar, but the benefits won’t happen all at once. So a new building that goes up in 2018 costing $10 million might be “worth” only half that much to us today. Another way to look at this is … would you take $5 today instead of waiting ten years to collect $10? Most people would. Same with the improvements in air-quality, congestion reduction and low-income mobility. They will be substantial, but the
